APIs, or Application Programming Interfaces, facilitate communication between software applications by defining a set of rules and protocols for data exchange. They allow different systems to interact seamlessly, enabling developers to integrate functionalities from one application into another. For example, a weather app might use an API to pull data from a weather service. This modular approach allows for greater innovation and efficiency, as developers can build upon existing services without starting from scratch, ultimately enhancing the user experience and making software ecosystems more interconnected.